On February 15, a unanimous decision by a five-judge bench of the Supreme Court declared the electoral bond scheme unconstitutional, citing violation of Article 19 of the constitution due to non-disclosure of political party funding.
The apex court’s ruling led to the nullification of provisions in the Companies Act, Income Tax Act, and Representation of the People Act related to electoral bonds. Consequently, banks were directed to cease issuing electoral bonds immediately. The State Bank of India was instructed to furnish details of electoral bond purchases and their encashment by political parties to the Election Commission by March 6, with the EC required to publish this information on its website within a week of receipt.
Asserting the voters’ right to information to cast votes, the Supreme Court emphasized that this right extends beyond state affairs.
The case, reserved for judgment since November 2023, saw arguments from both sides, represented by senior advocates Kapil Sibal, Vijay Hansaria, Prashant Bhushan, Attorney General Venkatramani, and Solicitor General Tushar Mehta. The challenge to the scheme was initiated by the Association for Democratic Reforms (ADR), the Communist Party of India (Marxist), Congress leader Jaya Thakur, and Spandan Biswal.
Electoral bonds, introduced in 2017 and formally launched in 2018, aimed to bring transparency to electoral funding by allowing anonymous donations to political parties. These bonds can be purchased in specified denominations from authorized branches of the State Bank of India and can be encashed by eligible political parties within 15 days. However, critics argued that the lack of transparency undermined democracy and created an uneven playing field between ruling and opposition parties.
The government defended the scheme, stating that it aimed to protect donors’ political affiliations while ensuring funds were sourced from recognized channels. The judgment comes after seven years of legal challenge to the scheme initiated by ADR in 2017.
